Welfarism and Capitalism

Today in The Telegraph, Mark Field[1] wrote about the sense of ‘welfare entitlement’ pervasive in the British public.  He implied that the welfare bill is a fundamental factor behind the start and continuation of the recession.  He all but said that the welfare bill has to be cut, and cites this misguided culture of entitlement as the reason.

 

“The real calamity to which the minds of the political class will soon be forced to turn is the unaffordability of our ever-growing welfare state.

Despite news of unprecedented austerity and savage public sector cuts, the government is still borrowing £1 in every £5 we collectively spend. “

Field deliberately writes these two sentences in conjunction to imply that the welfare bill is the reason why the government is still borrowing.   Rachel Reeves, shadow secretary for the Treasury, has a different view on why the government is still borrowing: “As we consistently warned, if you choke off the recovery and push the economy into recession, the government ends up having to borrowing more not less.”  James Knightley, an economist at ING Bank, said, “It appears that the main problem was with income tax receipts, which were down 7.3% year on year in April/May on the same period last year.”[2]  This was corroborated by Vicky Redwood, UK analyst at Capital Economic.

An economics blog lists eight possible factors that could be blamed for the recession.[3]    Indeed, the blog even cites government cuts as the biggest factor.  Cuts to welfare spending is equivalent to reduced real wages for those who cannot work, whether that is because of a poor job market or disability.  Maybe it is not the size of the welfare bill that is the problem but the cuts that are being made to it.

So let’s stop blaming the welfare bill for the recession.

 

“Prospective reformers’ biggest headache is that this addiction to the welfare state extends well beyond the work-shy and benefits scroungers of tabloid lore… Created as a reward for the collective national effort in winning the Second World War, the original purpose of our welfare state has been subverted as the UK has become ever richer. Nowadays even well-off Britons regard as an absolute entitlement nursery vouchers for children; living allowance for any disabled relatives; health visitors and carers for the sick, not to mention the benefit gratis of the services of a vast array of local government employees. Meanwhile even the very richest are entitled as a matter of course to free bus travel, substantial rail discounts, winter fuel allowance and free TV licences merely by reaching a certain age.”

The welfare state was not created as a ‘reward.’  It was created in response to the recognition that lack of access to healthcare meant that many sick people could not recover and so return to work.  It was created in the recognition that some people can never contribute to society through paid work.  It was created to ensure that no-one would be driven into poverty through loss of health or, for women, loss of a working spouse.   It was created because National Insurance, by pooling risk, is the best way to provide insurance against unpredictable and costly risks.

Maybe some people don’t need child benefit.  Maybe some pensioners don’t need free TV licenses and bus passes.  Maybe some disabled people have very rich relatives who can cover the cost of their care.

But don’t start talking about entitlements unless you are also willing to talk about what created the need for these benefits: insufficient jobs for the number of working-age adults; businesses not paying a minimum living wage; employers unwilling to take on workers who health makes the quality and quantity of their work unpredictable; too few affordable houses.

Pensioners are the only group for whom means-tested benefits are sufficient to reach the Minimum Income Standard.  Their non-means tested benefits cannot be touched, because Cameron promised that he wouldn’t.     No-one else can receive enough in benefits for a decent standard of life.  This culture of ‘entitlement’, when used to refer to the poor, is bemusing.  Entitled to poverty?

 

We have a right to health and well-being.  However much it costs, however much the currently healthy and rich protest, however many luxuries we have to cut and however many MPs have to bring their own bottles of water when they go in to work – if something can be done to ensure a minimum living standard, an adequate quality of life, for a person who is too ill to earn enough to support themselves, that something should be done.  It is not acceptable that in one of the richest countries in the world we are seriously talking about cutting the support of the vulnerable.  Sue Marsh, a disabled rights campaigner, went bankrupt in the 19 months it took her to get the DLA to which she was entitled.  How many more people, already suffering from chronic ill-health, do we think it is okay to also subject to poverty?  How many of us would accept cuts to NHS cancer treatment, just because it’s expensive?

We should let roads fill with potholes before we block the right to health and well-being.  Maybe we should reduce public sector pensions before we refuse to help those who are unable to help themselves.  We could even raise taxes to ask the wealthy to help the poor, rather than say to those who are sick that their sense of ‘entitlement’ is ‘wrong’ so we will stop their support.

 

Welfare was created so that the poor would never be penalised for the misfortune of being poor.  It’s time we remembered that.

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